Emergent BioSolutions Inc.

Thank you for standing by, and welcome to the Emergent BioSolutions first quarter 2021 earnings conference call. At this time, all participants are in listen-only mode. If you would like to speak for the public comment, please press star 1 and wait for your name to be announced. If you require any further assistance, please press star 0. Thank you. I would like to hand the conference over to Bob Burrows. Please go ahead.

Thank you, Cindy. Good afternoon, everyone. My name is Bob Burrows, Investor Relations Officer for Emergent Biosolutions. Thank you for joining us today as we discuss the operational and financial results for the first quarter of 2021. As is customary, today's call is open to all participants and the call is being recorded and is copyrighted by Emergent Biosolutions. In addition to today's press release, there is a series of slides accompanying this webcast available to all webcast participants. Turning to slides three and four in the slide presentation, during today's call, we may make projections and other forward-looking statements related to our business, future events, our prospects, or future performance. These forward-looking statements are based on our current intentions, beliefs, and expectations regarding future events. Any forward-looking statement speaks only as of the date of this conference call and except as required by law, we do not undertake to update any forward-looking statement to reflect new information, events, or circumstances. Investors should consider this cautionary statement as well as the risk factors identified in our periodic reports filed with the SEC when evaluating our forward-looking statements. During today's call, we may also refer to certain non-GAAP financial measures that involve adjustments to GAAP figures in order to provide greater transparency regarding emergence operating performance. Please refer to the tables found in today's press release regarding our use of adjusted net income, adjusted EBITDA, and adjusted gross margin, and the reconciliations between our GAAP financial measures and these non-GAAP financial measures. Turning to slide five, the agenda for today's call will include Bob Cramer, President and Chief Executive Officer, who will comment on the current state of the company, and Rich Lindahl, Chief Financial Officer, who will speak to the financials for 1Q21, as well as the forecast for calendar 2021. This will be followed by a Q&A session where additional members of the executive leadership team are present and available as needed. Finally, for the benefit of those who may be listening to the replay of the webcast, this call was held and recorded on April 29, 2021. Since then, Emergent may have made announcements related to topics discussed during today's call. And with that introduction, I would now like to turn the call over to Bob, whose comments begin with slide six. Bob?

Thank you, Bob, and good afternoon to everyone. Thank you for joining the call. As you know, we've been in the press and the news lately primarily related to our COVID-19 manufacturing activities. As a result, and given that our core business continues to operate pretty much as planned, I'll focus my prepared remarks around the news and let the core business performance speak for itself. My comments are summarized on slide seven in the deck accompanying this call. The executive management team and I remain committed to providing you with accurate information and open communications. I'd like to start by addressing our ongoing role and the involvement in the urgent battle against COVID-19. Since our founding, Emergent has been steadfastly committed to quality. That started in 1998 from the day we acquired our first manufacturing facility in Michigan and worked with the U.S. Department of Defense and the FDA to make it state of the art. Over the last two decades, we've dedicated ourselves to delivering on our mission to protect and enhance life through the quality of our products. Prior to 2020, we were operating our Bayview facility as a clinical development site. We've been preparing to seek licensure from the FDA for the facility to transition it to a commercial site. Then the pandemic hit. Thousands of lives were being lost daily. We stepped up along with the US government and our partners to increase global vaccine production capacity. We took on that Herculean task of progressing Bayview from a facility originally designed to develop and manufacture 50 million doses of a single influenza vaccine to one capable of producing hundreds of millions of COVID-19 vaccines. This was a remarkable accomplishment given the circumstances, but a necessary one given the severity of the pandemic. There's been a lot of misinformation about what happened at Bayview. Before I discuss the details, I want to say upfront that I take full responsibility and you have my commitment that we're going to do everything we can to resolve these issues quickly and as safely as possible. As you know, manufacturing biologic products is difficult and complex, and there are many intricate and detailed steps required. In parallel with those steps are checks, tests, and fail safes. Product loss occurs for a variety of reasons, especially during the early stages of the scale-up of a biologic product, as biologic processes and repeatability can be incredibly challenging. But the loss of a batch for a viral contamination is extremely serious, and we treated it as such. The FDA did as well, which is why they initiated in April of this year a four-cause inspection of the 2B licensed facility. We had implemented layers of disinfection and other protocols to lessen the inherent risk of cross-contamination. We believe that the batch was likely contaminated when one or more of these precautions did not function as anticipated, resulting in the transmission of the AstraZeneca virus to the Johnson & Johnson production suite. Importantly, Our rigorous safety and quality protocols worked as designed, identifying this contamination batch to ensure that it never left our facility. Much has been made about the choice to put two viral product candidates in one facility. Cross-contamination is a well-known risk when producing drug substance for multiple viral products in a single plant, which is exactly why there are so many fail-safes and quality control measures in place. But the odds of one or more COVID-19 vaccines in development failing was extremely high, which is why the government bet on multiple candidates. It's easy to go back and second guess these decisions that were made in the early stages of the pandemic. At the time, no one knew how fast we could get to a clinically viable vaccine and which candidates would be most successful. We committed to manufacture J&J's COVID-19 vaccine candidate at Bayview and the U.S. government reserved the remainder of our capacity and subsequently directed us to manufacture the AZ candidate in the same facility. Everyone should keep in mind that this rapid scale of manufacturing had never been done before. We took a process that normally takes years and condensed it into months. We didn't flinch at that challenge because that's what this company was built for. We take on public health challenges that others won't. What's important now is getting an accurate account of the challenges we face and using the lessons we learned to ensure that Emergent, the government, and our other partners can be best prepared to get us out of this pandemic and ready for the next public health crisis. We're disappointed that the situation has been reported in a way that may have eroded public trust in our ability to deliver. For things we should have done differently, my leadership team and I bear full accountability. But I take issue with the unfair criticism of the dedicated team of more than 400 professionals in Baltimore Bayview who have been working literally night and day for over a year to make sure that vaccine can be made available to the public. In all of this, they are no different from our frontline healthcare workers. None of us are perfect, and I take responsibility for our ultimate performance as a company. I do want to acknowledge the many people who have sent messages of support and encouragement to our team. It's greatly appreciated. Those who have stuck with us recognize the challenge we have taken to combat the pandemic and are rooting for us to succeed. Because when emergence succeeds, the public benefits. And that's what this is really all about. We've welcomed the FDA's involvement and strengthened their independent, scientifically rigorous review. They have issued us their inspection findings and our team is expected to submit within days a comprehensive response to those findings that's designed to meet or exceed the FDA standards. We are appreciative for the constructive ongoing dialogue with J&J and their support as we work this path forward. If the FDA is comfortable with the approach we propose, I'm hopeful that we can soon return to producing the tens of millions of doses per month. I'll stop there and turn the call over to Rich, who will take us through the results for the first quarter.